New Gift Certificate Industry Data

We're into the January post-holiday business doldrums, so I thought I'd scratch around and see if there's some "early returns" yet on how the gift business did in this past year. Most info comes from First Data, the nation's largest gift card processor, or Tower Group, a well know and highly respected research organization.

According to First Data's Holiday Gift Card Performance Report comparing 2009 gift card sales for the typically monster post-Thanksgiving week with 2008, the total dollar value of gift cards activated grew 17.8% and the number of cards activated grew 9.8%.



Overall sales and redemption rates for the combined categories of grocery, specialty retail, casual dining and quick-service restaurants held steady in 2009 (using data through September), which isn’t bad, considering in March 2008 they had fallen 20 percent.


About 6 percent of the total value of gift cards bought this year will go unused, according to TowerGroup, down from a record high of 10 percent in 2007. That drop makes sense in light of a recession that has turned formerly apathetic gift-card recipients into value-hungry consumers anxious to wring every last cent from a Target card.

Even with the drop, however, an estimated $5 billion worth of gift cards will be lost to fees and expiration dates or misplaced, shoved in a drawer or otherwise neglected this year.
According to TowerGroup, practical gift cards, such as those for fast-food chains and discount retailers, are used faster than cards to fine dining establishments and pricey department stores. That's because with a McDonald's and a Target on practically every corner, they're simply easier to use.

Specialty retail showed the biggest increase in both reloads and redemptions so far, going from negative 26 percent in March to a positive 6.2 percent in September for redemptions.



Another great tidbit - only one in six adults had “re-gifted” a gift card they received. Beats fruitcakes!



On my next submission, I'll talk about emerging new trends in the business.

Cheers!

Chuck